Exploration and production company EnQuest is launching a rights issue for around $138m, which will help it purchase the remaining 75% interest in the Magnus field from oil firm BP.

BP sold 25% of its interest in the field to EnQuest in 2017.

The deal with BP will cost EnQuest around $300m. Alongside the rights issue, EnQuest plans to fund the remaining amount for the acquisition through a loan from BP, which will be repaid through cash-flow from the interest over a five-year period.

The rights issue will also help EnQuest fund drilling of two infill development wells in Magnus field, which lies north-east of the Shetland Islands in the UK North Sea.

Purchasing a 75% stake will give EnQuest an extra 60 million barrels of reserves and an additional net present value of approximately $500m.

In addition, the deal will also allow EnQuest to raise its stakes in the Northern Leg Gas pipeline, Ninian pipeline system, and Sullom Voe oil terminal.

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EnQuest CEO Amjad Bseisu said: “The opportunity to add around $500m of additional net present value to the group and an additional 60Mboe of 2P reserves through the exercise of the Magnus option is compelling.

“Our view of Magnus as a high-quality asset has been enhanced since acquiring our initial 25% interest through the successful completion of two infill wells and the application of our asset life extension expertise.

“We have identified two further infill wells, both of which have very strong returns, to drill in 2019.”

“We have also identified two further infill wells, both of which have very strong returns, to drill in 2019. The acquisition will provide additional cash flows to further facilitate the reduction of the group’s debt.”

The company has also announced its plans to exercise certain options regarding the Thistle, and Deveron fields.

Earlier this year, EnQuest signed an agreement with BP as per which it would secure $30m in return for paying BP an amount equal to 4.5% of decommissioning costs of the Thistle and Deveron fields, subject to a cap of £57m.

EnQuest also gained the option, which is exercisable up to 30 January next year. This would secure an additional $20m from BP in return for managing the physical decommissioning activities for Thistle and Deveron fields and raising its payment obligation to 7.5% of BP’s decommissioning costs, with an increased cap of £99m.

The firm expects the Magnus deal and Thistle transaction to close in the fourth quarter of 2018.

Closure of the Magnus option is conditional to meeting or waiver of several requirements, including the approval of the deal by shareholders of EnQuest by ordinary resolution, as well as customary regulatory and third-party approvals.

If the Magnus option does not close, then EnQuest’s board will review how to return net proceeds of the rights issue to shareholders.

However, the Thistle deal is not conditional on the rights issue or the Magnus transaction. The firm will exercise the Thistle option even if the rights issue and Magnus transaction do not advance.